So, 16%, or 768,000, of small companies would consider applying for a peer-to-peer lending scheme (P2P) loan over the next year, says rebuildingsociety, a peer-to-business lending website that connects SME borrowers with lenders looking for better returns than those offered by savings accounts.
The research also showed that 26% of people in the UK (up to 12m) would consider loaning money to SMEs by joining a P2P scheme in 2014 when the sector will be fully regulated by the Financial Conduct Authority (“FCA”).
Peer-to-peer lending – also known as person-to-person lending, peer-to-peer investing and social lending – involves lending money to businesses or individuals online. The sector is set to boom with as much as £12bn to be lent through SME P2P schemes annually, roughly 10% of total mainstream SME bank lending in 2012.
Individual lenders can typically earn between 8% and 15% interest through P2P platforms such as rebuildingsociety, which is significantly higher than the sub-inflation returns offered by many bank and building society accounts.
Daniel Rajkumar, rebuildingsociety.com managing director, said: “This research shows P2P lending is well on its way to entering the financial mainstream with strong levels of interest from consumers and SMEs alike.
“The FCA’s regulatory oversight from next year will provide consumers with an additional layer of protection and our study shows this is very likely to boost take-up.”
The organisation was founded after Mr Rajkumar experienced frustration with his bank in terms of funding another of his business interests.
One successful customer is Exquisite Handmade Cakes, in Leeds, which was founded in 2004 and employs 30 staff.
Despite a host of national contracts and a £1.6m turnover, owner Viv Parry was refused a bank loan of just £50,000 to buy new cake slicing machinery.
She turned to rebuildingsociety.com and was listed as a lending opportunity for three weeks, but was fully funded within one week.
Lenders reviewed the financial and personal profile submitted by Ms Parry and quizzed her in the online forum.
She received bids from more than 60 individuals, pushing the interest rate payable on the loan down to a level that allowed her to accept the loan and purchase the portioning machine.
She said: “This is one of the most innovative schemes I’ve ever encountered.
“Businesses owners shouldn’t take it personally if a bank turns them down for finance because it is no longer a barometer for a good quality business.
“I would advise directors to embrace the challenge of securing growth finance because there are plenty of alternatives, like peer-to- business lending.”
“The FCA’s regulatory oversight from next year will provide consumers with an additional layer of protection and our study shows this is very likely to boost take-up.”
The organisation was founded after Mr Rajkumar experienced frustration with his bank in terms of funding another of his business interests.
One successful customer is Exquisite Handmade Cakes, in Leeds, which was founded in 2004 and employs 30 staff.
Despite a host of national contracts and a £1.6m turnover, owner Viv Parry was refused a bank loan of just £50,000 to buy new cake slicing machinery.
She turned to rebuildingsociety.com and was listed as a lending opportunity for three weeks, but was fully funded within one week.
Lenders reviewed the financial and personal profile submitted by Ms Parry and quizzed her in the online forum.
She received bids from more than 60 individuals, pushing the interest rate payable on the loan down to a level that allowed her to accept the loan and purchase the portioning machine.
She said: “This is one of the most innovative schemes I’ve ever encountered.
“Businesses owners shouldn’t take it personally if a bank turns them down for finance because it is no longer a barometer for a good quality business.
“I would advise directors to embrace the challenge of securing growth finance because there are plenty of alternatives, like peer-to- business lending.”
Click here to read the original article: "Peer2peer Lending set to take off as Banks Keep Hold of Purse Strings"
